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Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency

Posted By Lisa Novack, IRS, Friday, February 16, 2018

IR-2018-27, Feb. 13, 2018

WASHINGTON — The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.

Following up on a Security Summit alert issued Feb. 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme.

These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers' real bank accounts for the deposit.

Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.

Different Versions of the Scam

In one version of the scam, criminals posing as debt collection agency officials acting on behalf of the IRS contacted the taxpayers to say a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency.

In another version, the taxpayer who received the erroneous refund gets an automated call with a recorded voice saying he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security Number. The recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.

As it did last week, the IRS repeated its call for tax professionals to step up security of sensitive client tax and financial files.

The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. The IRS also encouraged taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.

Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will reject because a return bearing their Social Security number is already on file. If that’s the case, taxpayers should follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers unable to file electronically should mail a paper tax return along with Form 14039, Identity Theft Affidavit, stating they were victims of a tax preparer data breach.

Here are the official ways to return an erroneous refund to the IRS.

Taxpayers who receive the refunds should follow the steps outlined by Tax Topic Number 161 - Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.

If the erroneous refund was a direct deposit:

  1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.

If the erroneous refund was a paper check and hasn't been cashed:

  1. Write "Void" in the endorsement section on the back of the check.
  2. Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
  3. Don't staple, bend, or paper clip the check.
  4. Include a note stating, "Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check)."

The erroneous refund was a paper check and you have cashed it:

  • Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
  • If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS assistor that you need information to repay a cashed refund check.
  • Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
  • Include a brief explanation of the reason for returning the refund.
  • Repaying an erroneous refund in this manner may result in interest due the IRS.

IRS mailing addresses for returning paper checks

For your paper refund check, here are the IRS mailing addresses to use based on the city (possibly abbreviated). These cities are located on the check’s bottom text line in front of the words TAX REFUND:

  • ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810
  • ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341
  • AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741
  • BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742
  • CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011
  • FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727
  • KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302
  • MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118
  • OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201
  • PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104

 

To view the original article, please visit the IRS website here.

Tags:  IRS  Scam  Security  Small Business  Taxes 

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Prop 206 FAQ's

Posted By Kristi Feist, Payday HCM, Tuesday, March 7, 2017

Frequently Asked Questions (FAQ’s) About Proposition 206

This is an unofficial publication with the intent to answer some of the FAQ’s we continue to receive on Proposition 206, and more specifically the Earned Paid Sick Time.  All information provided is herein for informational purposes only. 

What is proposition 206?

Proposition 206, the Fair Wages and Healthy Families Act passed during the November 2016 election and affects all employers.  Approved by over 50% majority, it establishes the new state minimum wage (effective January 2017) and earned paid sick time requirements. 

What is earned paid sick time (EPST)?

Time accrued by an employee that is compensated at the same hourly rate and with the same benefits, including health care, as the employee would normally earn during hours worked. 

How much EPST must an employer offer?

15 or more employees - Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but employees are not entitled to accrue or use more than 40 hours of earned paid sick time per year, unless the employer selects a higher limit.

Less than 15 Employees - Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but they are not entitled to accrue or use more than 24 hours of earned paid sick time per year, unless the employer sets a higher limit.

What needs to be communicated to my employees about the EPST?

Employers must give employees written notice of the following at the commencement of employment or by July 1, 2017, whichever is later:

• Employees are entitled to earned paid sick time;

• The amount of earned paid sick time that employees are entitled to accrue;

• The terms of use guaranteed by Arizona’s earned paid sick time laws;

• That retaliation against employees who request or use earned paid sick time is prohibited;

• That each employee has the right to file a complaint if earned paid sick time is denied by the employer or the employee is subjected to retaliation for requesting or taking earned paid sick time; and

• Contact information for the Industrial Commission. The Industrial Commission’s 2017 model earned paid sick time notice can be found here. An employer must also provide employees either in or on an attachment to the employee’s paycheck:

• The amount of earned paid sick time available to the employee;

• The amount of earned paid sick time taken by the employee to date in the year; and

• The amount of pay time the employee has received as earned paid sick time.

Can employers have a waiting period before EPST can be used? 

An employee may use earned paid sick time as soon as it is accrued. However, an employer may require an employee hired after July 1, 2017 to wait 90 calendar days after the start of employment before using accrued earned paid sick time.

Must an employer carry forward balances of EPST at the end of a year to the next year?

Yes, unless the employer pays out any unused EPST at the end of the year and provides the employee with an amount of EPST in full as of January 1 the subsequent year. 

How does this affect my current PTO Policy?

If there is a current PTO policy in place that meets the or exceeds EPST minimum requirements the employer is not required to provide additional pto.  However, then all earned PTO can be used for the same purposes as the EPST. 

Can I ask for documentation when EPST is used?

Yes, but only if the EPST was taken on 3 or more consecutive days.  The employer cannot use EPST as an absence that may lead to an adverse action such as discipline or discharge.  

 

Have more questions?  Join us March 14th as PayDay HCM welcomes two lawyers to aide us in Navigating Proposition 206.

 

Tags:  HR  Legal  Small Business 

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Should you consider a commercial construction loan?

Posted By Julie Smith, Horizon Community Bank, Wednesday, February 22, 2017

Your business has grown, and it might be time to move into your own building. You’ve looked at commercial real estate for sale or lease, but just haven’t found what you’re looking for. The location or size is wrong, its age requires costly remodeling, or some other feature excludes every property you’ve seen.

Should you build?

Learning about the process, securing a loan and other basic details might help you decide.

HOW DO I BEGIN THE PROCESS?

There are many ways to educate yourself about commercial construction loans, but the fastest path to a smart answer is a straight line to experts who deal with this every day. Obtaining their help to answer these three questions is where you begin.

1. Can you qualify for funding? Meet with a commercial banker to discuss financing. Traditional partners include a commercial builder, a commercial real estate agent, a real estate attorney and a banker. We suggest beginning with the banker to be sure you qualify for the necessary funding before you spend too much time pursuing construction or shopping for land. It gives you a solid understanding of payments you can afford, how much of cash you’ll need for the down payment, and other important financial details.

According to Propertymetrics.com (and a sentiment we agree with), “construction or development loans are almost always [financed by] local community or regional banks. Historically this was due to bank regulation that restricted trade areas for lending.”

 Using a community bank also gives you access to a commercial banker with strong local relationships and a solid understanding of the local market. This can be incredibly helpful when selecting other construction partners. The banker often knows builders personally or by reputation, and can point you in the right direction with options you might not have considered. 

 The right banker can also help you with customized financing, since you won’t need just one loan. You’ll need to understand the kind of funding your cash flow can support, and obtain a package loan that includes short-term (mini-perm) funding to purchase land and fund building costs, then a long-term mortgage loan to pay it off at a lower interest rate. Other loans might be included in your package, which the banker will help you understand. It’s a complex process. 

2. How long will it take? Put together a realistic timeline from funding through move in. Building from the ground up is a labor-intensive, LONG process. Not every business can afford to wait a year or longer to move in.

Sitting down to think through the process and how long a build takes from start-to-finish is sobering. Is waiting twelve or eighteen months a problem for business operations? Do you have that kind of time?

Talking this over over with your construction partners, along with the actual timeline of similar local projects, may be just the realization needed to make a decision that’s right for you.

3. Is land available in the location you prefer? Arizona is growing quickly, and its major cities are challenged with rapidly disappearing empty lots for sale. It’s harder and harder to find land that isn’t already occupied. Depending on budget, some are even bulldozing older buildings to make room for new construction in premier locations. Commercial builders have insight into available land, as do commercial real estate agents. Once you have discussed financing and are qualified to secure funding, it’s time to start looking at real estate options.

Figuring out if the right piece of property is available or not can swiftly guide your decision to build.

WHAT DOES THE UNDERWRITING PROCESS LOOK LIKE?

Funding for a commercial loan can differ based on the use of the building. If it’s an investment and you’ll be leasing space, terms are different than an owner-occupied loan. A banker considers the property’s ability to generate cash flow, instead of just overall cash flow for the business, and the investor’s experience and ability to manage the property. If the property is to be owner-occupied, a Small Business Administration (SBA) loan may also be considered.

For the sake of this article, let’s assume the loan is for an owner-occupied building. Before a banker begins helping you create a pro-forma document detailing the construction project, budget, market conditions, builder/contractor information, financials and credit history, they will discuss the purpose and goals of the project with you, and do a preliminary screening of your creditworthiness. From the preliminary information provided, the bank will decide if the proposed transaction meets its criteria for a qualified transaction. If the initial decision is to move forward, a term sheet is provided outlining details of the proposed loan.

Then the real work begins. The business owner will be asked to provide common financials, such as personal tax returns, profit and loss statements for the business, construction cost estimates and full project plans, and more. The banker will work with you to complete the process, which is extremely detailed.

Once loan underwriting is complete, the loan shifts into the closing process. It’s complex, with a vast amount of paperwork and processes required to protect the banker and borrower. Because the construction loan is funded in stages based on project completion, the borrower won’t receive a check and be on their way.  Both the borrower and the developer will work closely with someone at the bank to follow bank policies and procedures in accordance with the loan terms.

TWO THINGS TO REMEMBER

Because of the time involved and how closely the relationships must work together, choosing the right combination of banker and builder is essential. You’re virtually married to them to them for years, in constant communication almost every single day. Their experience, skills and connections make all the difference

It’s also important to understand the time commitment commercial construction requires before you commit to the project. It’s not just about how many months it takes to complete, but how much of your time the project will require.

Business owners are busy and construction projects have a million and one details demanding attention. Sitting down to think through the process and how long a build takes from start-to-finish is sobering. It’s virtually a full-time job on its own. Do you have that kind of time? Can you afford the intangible “cost” of diverting attention from your business to the construction process? These are worth consideration.

If this isn’t something a borrower can manage, perhaps it’s better to purchase and retrofit an existing building, rather than building.

Commercial construction is an intimidating venture for beginners. If you have questions about funding, qualifications or the process, Horizon Community Bank is here for you with a free, no-obligation consultation. Contact us today, we’re pleased to help. You can also reach out to us on our Facebook page

Tags:  business  business loan  commercial real estate  financing  small business 

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Is it time for a small business loan?

Posted By Julie Smith, Horizon Community Bank, Tuesday, September 13, 2016

It’s time to invest in your business assets, be it a better location, new talent or updated machinery… and you’ve toyed with the idea of a business loan.

You’ve probably explored a million and one funding options, knowing funds from family, friends and credit cards isn’t an effective solution. But still, you hesitate taking on debt.

Is it time? Are you ready?

Let’s explore some possibilities.

IS THE TIMING RIGHT?

An honest evaluation of your business will help you decide if taking on debt is the right “next step” or something that isn’t in your best interests.

A few questions to consider include:

  1. Is your business profitable or operating at a loss?
  2. Are you borrowing funds to remain in business?
  3. Do you want loan funds for a want or a need?
  4. Do you have a strong business plan already written?
  5. What kind of personal AND business credit history do you have?
  6. How would you spend the borrowed funds?
  7. Will the investment directly impact revenue? Does that matter?
  8. Can you afford loan payments, even if accounts receivables were significantly late or if you lost a major client?
  9. What assets do you have available that a bank would consider as collateral?
  10. How will the borrowed funds provide a positive ROI or increase the value of your business?

UNDERSTAND WHAT TYPE OF LOAN YOU NEED

Business finance is complicated. Because there are dozens of types of business loans–short-term loans to cover temporary cash flow problems, equipment purchase loans, commercial mortgage loans–it’s important to understand the type of loan you need. After all, the “loan du jour” at the closest branch of a big bank might not be the best choice.

Once you understand exactly what type of loan you need, it’s easier to consider alternative funding options for that loan.

Not all banks or online lenders provide all types of loans. As a consumer, for example, you wouldn’t pay for a new car with a second mortgage on your home or a credit card – business loans are similar. You also wouldn’t go to a bank that specializes in consumer lending for a commercial loan.

There are dozens of types of loans, and you’ll want to match the need with the right lender, type of loans and terms you can afford.

It helps to discuss these things with a qualified banker (see our recent article on Right Financing) or spend time educating yourself online about options.

Looking for more information on smart reasons to get a business loan? We like this article on Entrepreneur.com.

If you’ve done your research and explored your options, but still feel uncertain it’s the right move, all is not lost. You have several other options.

THE ULTRA-CONSERVATIVE CHOICE: SAVE

To pay for new assets without taking on debt, the most conservative option is to take it slow and save your profits until you can afford the purchase, or wait until profits can consistently support an increase in payroll or accounts payable demands.

This zero-risk choice is safe, but the time required might be impractical or even harmful to your business.

PARTIAL-FUNDING

If you’d like to move a little faster, a combination tactic might serve you well: saving until you have a significant portion of the funds you need, then financing the rest. After all, who says you need to borrow 100% of the amount you need, right?

Just remember to keep enough cash on hand for emergency situations, such as a shortfall with payroll, or covering slow account receivables.

FIRST THINGS FIRST: REVIEW YOUR BUSINESS PLAN!

Once you’ve evaluated the options and you start to consider taking a loan, it’s always good to go back to the core of your business before you move forward. Review your business plan and improve it. Include financial projections for the next 3-5 years and make sure everything is in order.

By doing that, you will get a clearer vision of your future goals and will be able to make a more informed decision. Having everything organized in one place will also help your case in the bank in case you do decide to take out the loan.

Ready to talk to a banker? Give us a call today and schedule an appointment with a small business specialist. We’re here for you, no matter what’s on your horizon.

Tags:  arizona small business  business loan  small business 

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Avoid These Six Debt Collection Pitfalls

Posted By Kenyatta Turner, LegalShield Independent Associate, Tuesday, May 24, 2016

Small Business News


Avoid These Six Debt Collection Pitfalls 

Your ability to collect a debt owed to your business hinges on the processes and policies you have in place. You can avoid some of the most common mistakes and improve your chance of successfully collecting a debt by understanding where problems often arise. Your LegalShield provider law firm is ready to help you understand the laws that govern collections, draft letters to debtors and assist you in taking further legal action if necessary. Call your LegalShield provider law firm if you need assistance with a collection matter or have any questions.

  1. “We didn’t have a payment policy or written contract.” Handshake deals and verbal agreements are difficult to legally enforce. It is essential to have a signed contract for any product or service for which payment will be made at a later date. Your contract or agreement should include a uniform payment policy. Your policy should include exact due dates or a timeline for payment, the name of the individual or business responsible, accepted forms of payment and any potential fees or interest for delinquent payment.

  2. “Our accounting records are a disaster.” Accurate and detailed records will help you quickly identify and manage delinquent accounts. Your customers and clients should know exactly where their account stands. Provide itemized invoices that include a specific due date for payment. If an account is delinquent, include the total amount owed, the number of days past due, the original due date and any late fees or interest owed.

  3. "We waited because we didn't want to upset the customer." If a customer's account becomes past due, consider placing a hold on the account and contact the customer. The longer a customer's account is delinquent and the more debt they accrue the more difficult collection becomes. You may have to make the determination to stop providing additional services or products until payment is made. Always remain professional and courteous.

  4. “We don’t have any documentation but I remember talking to the customer.” Good accounting practices will insure you retain copies of bills and invoices. You must also document your collection efforts. Your records should include letters and emails, as well as the dates and times of any phone calls or meetings. This information will be extremely important if legal action becomes necessary.

  5. “I was so mad I couldn’t stay calm.” Remain professional and friendly during each interaction with delinquent customers. It is illegal to threaten, harass or intimidate customers who are unable to make payment. Never threaten an action you are not willing or legally allowed to make. Making the issue personal or becoming aggressive will hurt your chances of successfully collecting the debt and could land you in legal trouble.

  6. “I didn’t really think the attorney could help.” Utilize your LegalShield small business membership. Call your provider law firm for assistance with collection matters. Your attorney can help you understand the law, draft a collection letter on your behalf, review your contracts and answer other legal questions you may have. If a collection letter does not resolve the matter, your provider law firm will advise you on additional legal remedies available to your business.  

 

For more information about LegalShield or IDShield for yourself, your family, your business, or your employees, please contact Kenyatta Turner, Independent Associate at 602-367-1069 or KenyattaTurner@LegalShieldAssociate.com.  Worry Less...Live More!

 

Tags:  accounting  Bookkeeping  contracts  CPA  debt cancellation  debt collection  family-owned business  finance  financing  legal advice  legal services  small biz  small business  Taxes 

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